Across the industry, directors and executives recognize that historical business models are no longer sustainable. A host of well-documented challenging economic, regulatory, technological, and customer-related conditions have made it clear that there is no alternative other than rapid transformation. “There has not been a point in history that the operating model has been strained so significantly, from so many directions. Insurance rates are falling, global growth is slowing, and interest rates are profoundly affecting us. We can’t grow out of these problems,” said one director. These conditions are exacerbated by the accelerating pace of technological change. But many insurers also agree with one chair who put some of the blame on a failure in internal decision making, specifically a failure to invest in modernization and integration over time: “We’ve been a laggard industry in terms of modernization. This is because standardization is so challenging, and we’ve been built by acquisition with no integration. To take it to the next level, I need one organization.”

While some companies having been slower to respond than others, virtually all complex insurers are now undertaking massive and often near-continuous transformation efforts. Both transformation and the need to stay abreast of the changing environment demand a different approach to governance. One director said, “The pace of change has accelerated so significantly that organizations that were good at change are now challenged by it.”

On December 6, 2016, IGLN participants met in New York to discuss enterprise transformation and the role of the board in transformation efforts. See Appendix A for a list of participants. This ViewPoints synthesizes key insights emerging from the meeting and related discussions and centers on three themes:

Historical business models are unsustainable, making transformation imperative